Transcript 1-012 - Template - Road

PPP in Road Sector
ECONOMIC & RISK ANALYSIS
Vivek Aggarwal
MD, MPRDC
Connecting People Through Quality Infrastructure
Madhya Pradesh Road Development Corporation
Incorporated as wholly owned State Govt. Company under
Companies Act 1956, in July 2004.
‘Highway Authority’ for State Highway.
 Upgrades, Constructs and Strengthens the total length of
State
Highways.
 Develops projects in the State on Public Private Partnership
basis.
 The Hon’ble Chief Minister of Madhya Pradesh is the
chairman, Hon’ble Minister of Public Works Department & the
Chief Secretary are the Vice Chairmen, the Principal
Secretaries of the Finance dept., Forest Dept., Urban
Administration & development and Mining Dept. are the
members of the Board.
 MD, MPRDC is also one of the director.
Our Projects
Invite private investment by providing grant / premium
to / by the concessionaire on competitive bidding
Our Projects
Category/Model
Cost (Crores)
BOT (Toll)
16094
BOT (Toll + Annuity)
3260
BOT (Annuity)
4578
ADB
4159
Regular Contract
1427
ROB/RUB
1645
Border Checkpost
1094
OMT
45
Building Works
165
Grand Total
32467
Our Projects: Cost Share in Crores of Rupees
Standard terms for PPP
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Viability Gap Funding.
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Premium
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Concession Fee.
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Independent Engineer.
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Financial Closure.
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Appointed Day.
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Concession Period.
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User Fees.
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Commercial Operation Date.
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Schedule of standards and specifications.
Financial Models
1.
BOT (Toll) Model
2.
BOT (Toll + Annuity) Model
3
BOT (Annuity) Model
4.
Deemed Shadow Fee Model
5.
OMT Model
Principles of Economic Analysis
• Assessment of cost (Feasibility Study)
• Addition on account of Financing cost, Price contingencies
etc.
• Demand assessment & user charge.
• Assessment of growth of demand.
• Prevailing rate of interest.
• NPV of future cash flows on the basis of industry standards
on IRR.
• Assessment of Social Impact.
• Concession Period.
• Viability Gap Funding.
• Impact of Inflation.
Case Study-I
Economic Analysis of Mhow-Ghatabillod Road
Key Assumptions:
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Total Project Cost: 177.26 Crores
Length: 26.9 Km.
VGF: Nil
Equity: 30%
Debt: 70%
Concession Period: 23 Years
Tenure of Debt: 12 Years
Repayment starts: 3rd Year
No. of yearly installments: 10
No. of Toll Plaza: 1
Construction Period: 24 Months
Tolling starts: 3rd Year
Annual Toll fee increase: 5%
Economic Analysis of Mhow-Ghatabillod Road
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Traffic Count Summary:
CATEGORY
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NO. OF
VEHICLES
BASE TOLL
RATE AS ON
2011
TOLL RATE
Car
1880
0.44
11.83
Minibus/LCV
826
1.07
28.77
Bus
318
2.19
58.88
MAV-3 Axle
4711
5.29
142.23
2- Axle Truck
2704
2.65
71.25
Traffic Retention rate: 90%
Traffic Growth: 5%
Economic Analysis of Mhow-Ghatabillod Road
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Operation Parameter
Routine maintenance(Rs ‘000/Km,
start yr)
50.0
Operations/toll (Rs lac, start yr) +EMP
24.0
Periodic maintenance (Rs lac/km)
20.0
Periodic maintenance frequency
(Yr)
5
Insurance (% project cost)
0.20 %
Toll days per year
360
Price Inflation: 5%
Economic Analysis of Mhow-Ghatabillod Road
• Other Macroeconomic Assumptions:
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Corporate income tax rate: 35.88%
Depreciation: 10.0%
Interest rate (per annum): 12.0%
Tax holiday:10 Years
• Construction Cost:
 1st Year: 40%
 2nd Year: 60%
Economic Analysis of Mhow-Ghatabillod Road
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RESULTS:
PROJECT IRR
Post-tax IRR
28.18 %
Equity IRR
32.14 %
NPV @ 12% discounting
Rs 470.07
 Financial Analysis based on assumptions envisages project viability on
nil VGF.
 IRR suggests the possibility of premium.
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OUTCOME:
On bidding, the project was awarded on Premium@
14.58 Crores which is to be increased 5% per
year.
Project is completed 14 months ahead of Schedule
Completion Date.
Case Study-II
Economic Analysis of Satna-Chitrakoot Road
Key Assumptions:
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Total Project Cost: 121.78 Crores
Length: 73.8 Km.
VGF: 40 % of TPC
Equity: 30%
Debt: 70%
Concession Period: 25 Years
Tenure of Debt: 12 Years
Repayment starts: 3rd Year
No. of yearly installments: 10
No. of Toll Plaza: 2
Construction Period: 24 Months
Tolling starts: 3rd Year
Annual Toll fee increase: 5%
Economic Analysis of Satna-Chitrakoot Road
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Section
1
Traffic Count Summary:
Toll
Plaza
42.0
2
31.8
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CATEGORY
NO. OF
VEHICLES
BASE TOLL
RATE AS ON
2013
TOLL RATE
Car
995
0.37
15.54
Minibus/LCV
197
0.91
38.22
Bus
130
1.87
78.54
MAV-3 Axle
81
4.50
189.00
2- Axle Truck
135
2.26
94.92
Car
673
0.37
11.77
Minibus/LCV
88
0.91
28.94
Bus
82
1.87
59.47
MAV-3 Axle
75
4.50
143.10
2- Axle Truck
101
2.26
71.87
Traffic Retention rate: 90%
Traffic Growth: 5%
Economic Analysis of Satna-Chitrakoot Road
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Operation Parameter
Routine maintenance(Rs ‘000/Km,
start yr)
50.0
Operations/toll (Rs lac, start yr) + EMP 17.0
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Periodic maintenance (Rs lac/km)
10.0
Periodic maintenance frequency
(Year)
5
Insurance (% project cost)
0.20 %
Toll days per year
360
Price Inflation: 5%
Economic Analysis of Satna-Chitrakoot Road
• Other Macroeconomic Assumptions:
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Corporate income tax rate: 35.88%
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Depreciation: 10.0%
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Interest rate (per annum): 12.0%
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Tax holiday:10 Years
• Construction Cost:
 1st Year: 40%
 2nd Year: 60%
Economic Analysis of Satna- Chitrakoot Road
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RESULTS:
PROJECT IRR
Post-tax IRR
15.88%
Equity IRR
17.13 %
NPV @ 12% discounting
98.09
 Financial Analysis based on assumptions envisages project viability
on 40% VGF.
•
OUTCOME:
 On bidding, the project was awarded on 38.94% VGF.
 Project is Under implementation.
Risk Apportionment
 Conditions Precedent to be fulfilled by the Concessionaire
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Submission of Performance Security within 180 days from the
date of signing of contract.
Execution of the Escrow Agreement.
Execution of the Substitution Agreement.
Procurement of all Applicable Permits relating to
environmental protection and conservation of the Site.
Execution of Financing Agreement.
Legal opinion of the Legal Counsel on the
concession.
Upon failure to meet any of the Conditions Precedent,
damages @ 0.2 % of the Performance Security,
subject to a maximum of 20% of Performance
Security.
Risk Apportionment
 Conditions Precedent to be fulfilled by MPRDC
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Procurement of Right of Way to the site.
Procurement of Environmental Clearance.
Procurement of GAD from Railway.
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Upon failure to meet any of the Condition Precedent,
damages @ 0.1 % of the Performance Security, subject
to a maximum of 20% of Performance Security.
Risk Apportionment
 Force Majeure
Act or event which
i.
ii.
iii.
is beyond the reasonable control of the affected party.
Affected Party is unable to prevent by exercising due
diligence & Good Industry Practice.
has Material Adverse Effect on the Affected Party.
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Types of Force Majeure:
i.
ii.
iii.
Non-Political Event:
Indirect Political Event.
Political Event.
Risk Apportionment
Effect of Force Majeure on Concession.
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Prior to Appointed Dateperiod for achieving Financial Closure shall be extended by a
period equal to the duration of Force Majeure event.
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After Appointed Date-
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Before COD- Concession Period & Project Completion
Schedule shall be extended
After COD- Concession Period shall be extended in
proportion to the loss of fee on a daily basis, if daily toll
collection is less than 90% of average daily fee.
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Risk Apportionment
TYPES OF
FORCE
MAJEURE
ACTS
ALLOCATION OF COST
AFTER APPOINTED DATE
TERMINATION
PAYMENT
Non-Political
Event
Act of God, epidemic, adverse
weather conditions, earthquake,
landslide, cyclone, flood, strikes,
boycotts etc.
Party shall bear their
respective Force Majeure
Cost & neither party shall
require to pay to the
other party any cost.
90% of debt
due less
insurance cover
payable to the
concessionaire
Indirect
Political
Event
Act of war, industry or state wide
strike, civil commotion, political
agitation
Force Majeure cost not
exceeding insurance
cover shall be borne by
the concessionaire &
one-half be reimbursed
to the concessionaire.
i.
Force Majeure cost not
exceeding insurance
cover shall be borne by
the concessionaire &
reimbursed to the
concessionaire fully.
i.
ii.
Political
Event
Change in Law, unlawful
revocation of any clearance,
license, permit, authorization,
NOC, consent, approval of
exemption required by the
concessionaire.
ii.
Debt due
less
insurance
cover.
110% of
adjusted
equity.
Debt due
150% of
adjusted
equity.
Risk Apportionment
Termination & Termination Payment
Termination
Termination for
Concessionaire Default
Termination Payment
i.
ii.
Termination for Authority
Default
i.
ii.
Prior to COD- No
termination payment
During Operation
Period- 90% of debt
due less insurance
cover.
Debt due
150% adjusted equity.
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Pioneer in road sector development through PPP in the country.
Adopted DBFOT Model of Tendering based on Model Concession
Agreement of Planning Commission.
First agency in the country to get VGF from GOI.
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Under VGF scheme of GOI
– 40 % of project cost is sanctioned to make projects viable.
– 20% is given by GOI.
– 20% is given by the State Government.
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In several Projects MPRDC receives Premium.
VGF/Premium is the bidding Criteria.
Distance based user fee (Toll).
Our Strengths
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Concessionaire’s faith in MPRDC due to transparency in bidding process.
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Lender’s faith in MPRDC ensuring Financial Closure of BOT Projects.
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Deployment of Supervision and Quality Control Consultants with
international expertise.
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Deployment of capable construction agencies with introduction of
advance machineries and equipments.
• Adequate Budget provision for Annuity &VGF payments by the
State Government.
• Annuity payment along with bonus on due date.
Our Strengths
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Outsourcing of Expertise.
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Consultants are appointed for Feasibility Report/DPR and Supervision of
Construction.
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Experts like Legal Advisor, Chartered Accountant, Company
Secretary, Environment expert, MIS expert, Road Data System Engineer are
engaged in house.
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In-house financial analysis.
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Planning is done well in advance at the head office level.
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Fast decision making.
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Political commitment & support.
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Concessionaires are treated as partner.
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Bills are cleared in 2 to 4 working days.
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All Stake holders are facilitated.
Accident Response System
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Implementation of ARS system on PPP mode is probably a first in the
world.
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State wide implementation of ARS will be first in country.
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ARS to address safety requirements in the larger perspective.
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Technical Assistance through ADB for capacity building in road safety.
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Accident Response System & Traffic Management Centre in
Madhya Pradesh including operation & maintenance for 5
years with estimated cost of Rs.12.50 crores has been proposed.
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A Road Safety Cell is created in MPRDC.
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MPRDC has engaged an agency for ARS on Annuity basis.
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ARS includes centralized call centre, GIS based automatic
vehicle tracking system (AVTS), Computer aided
dispatch system, Traffic Management Centre.
State Highway Fund
GoMP has enacted the Madhya Pradesh Rajmarg Nidhi Adhiniyam 2012 to
provide for the establishment of a Fund for investments in the highways &
infrastructure projects of the State.
Corpus of the Fund is 125 Crores (approx).
Executive Committee under the Chairmanship of Chief Secretary to
administer the fund.
Sources of Fund
Application of Fund
All payments of Premium
For Maintenance and Repair of Highways
Proceeds towards encashment of Performance
Security or Bid Security
For Meeting any Development Cost of Highway
or Infrastructure Project
All returns on investments made out of the
Fund
For Project Preparation, Pre Tender Activities,
Cost towards Utility Shifting ,Land Acquisition
A country has to pay for its roads.
Whether it has them or not, it pays
more for those it does not have.
So Lets Have them…..
Connecting People Through Quality
Infrastructure